Subscribe to RSSArizona Tests Lease-Back Plan to Settle Budget Deficit
By: Andrew Paffrath
Phoenix (NAZ Today)-The Arizona Legislature along with Gov. Jan Brewer are looking into plans to help balance the state budget, which is among the worst in the country. The plan, signed by Governor Jan Brewer earlier this month will offer up various state properties for sale.
The plan is intended to help close the gap in the projected $3.2 billion deficit by contributing the sale price of properties, such as the House and Senate buildings, to the budget. The state will retain use of the buildings but ownership will not be transferred back until the state fulfills the sale price in a Lease-Back agreement over a period of 20 years.
Lisa Paffrath of Century 21 Associates Unlimited in Flagstaff said this process is not at all uncommon. “In my regular interaction with clients, these options come up all the time,” Lisa said,”its often a mutually beneficial solution for both parties.” She went on to add that what the state intends on is not a true Lease-Back, but rather a hybrid form that reverts ownership to the seller after a designated time. “In a typical Lease-Back, ownership would only revert if the buyer defaulted on the contractual agreements” she added.
Arizona is not the only state to explore this type of solution for budget shortcomings: California is also offering up properties like the Orange County Fairgrounds as well as 17 office buildings around the state. Todd Haggerty, an analyst for the National Conference of State Legislatures, commented that states are employing any and every option to balance budgets.
In addition to the Executive Offices of the Governor, Arizona has proposed 10 state prisons, a veterans care home and Kartchner Caverns as candidates for the Lease-Back sale. Fortunately, Flagstaff has thus far not had any properties designated eligible for the plan.
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Associated Press writer Judy Lin in Sacramento, Calif., contributed to this report.
